Friday, 23 October 2015

As a young man in 2003 during the last flight of Concorde aircraft from New York to London, I couldn’t wrap my head around the fuss about an aircraft that was retiring and why people were very emotional about it. “If it is retiring, why can’t they build another one?” I asked myself. While writing my last article, ‘3 Reasons Customers resist innovative product,’ Concorde Supersonic Airline was one of the failed ‘innovative products’ I considered, and I discovered that Concorde supersonic aircraft was so good that it wasn’t profitable to build another one.

Concorde Supersonic airline was designed to redefine luxurious air travel, indeed it did. It was the only commercial aircraft that was twice as fast as the speed of sound, and it was able to cut an 8 hours journey down to 3 hours. It was an engineering marvel and a delight to the eyes. Its innovative features were never in doubt, and it broke every market barrier in the aviation industry, and set a standard no other commercial airline could compete with. Its engineering feat was awesome, and technically, Concorde was ‘perfect’. By the time it was ready for the market, about 16 companies placed orders for over 70 aircrafts however, only 14 were eventually built for 2 companies.

So went wrong? Strategy wise, the business model adopted by developers of Concorde led to its resistance by potential buyers. The developers were so focused on the engineering and technical power that they neglected the business aspect of the aircraft. In fact, ‘the aircraft was built by engineers, not entrepreneurs.’ Just like the Concorde, so many businesses today have great products with bad business model. In developing the business model Concorde miss out on:

Customer Input

Customer input in the development of the Concorde was low or non existence. According to a group led by Matt Hooks, “....rather than focusing on the needs of the customers in the aviation market, the developers of the Concorde focused on creating the market itself thinking of the customers second.” The result was a total rejection by would-be customers and even the two airlines that had them in their fleet struggled to keep them profitable. Many entrepreneurs are so excited about the feat their product can perform that they believe, ‘once it is good, customers will buy.’ They are product driven, and care less about the need of the user of such product. Your customers should be an integral part of your product development process. Your business model is never complete without consideration for customers’ input.

Market Potential

The major implication of not including customers in your product design process is that you may likely misinterpret the potentials of your market. The Concorde developers believed that their innovative product will automatically translate into huge customer market. They only defined their market as those who want to fly ‘Supersonic’ without considering if those who could afford it are sufficient to capture value for the organisation. The Concorde’s market was narrowly defined, and its market potential was wrongly assessed, and this affected the value of its market. Entrepreneurs that wrongly assess their market potential will end up misinterpreting their market and losing value to less competitive businesses.

The implication of focusing on performance at the expense of customers’ input and market potential in your business model is the likelihood of wrongly pricing your products. For Concorde, the price was too high that the customers were not ready for the cost that came with it. Innovative products must provide a tradeoff between value and price, product performance is not enough to keep you going in business for long.

Monday, 19 October 2015

The ultimate aim of any
small business owner is to get to a stage where the business becomes self
sustaining or what I refer to it as ‘putting your business on auto pilot.’ That is allowing your business to
run with little or no supervision from the owner. This is an error I have
discovered recently from some small business owners who have a lot of ideas
they want to explore. They are so enthusiastic about their ideas that they want
to take all of them to the market at the same time. While it is good to hands off, as it shows
that the business has matured enough to do without you, an entrepreneur must
get the timing right.

A friend recently
launched a new business. The quality and features of his product was his major
selling point and customers loved it. 6 months later, I was invited to assess the
business performance and make recommendations. Amongst other things, I observed
that my friend never stays around to monitor the activities going on in his
business. When I asked, his response was that he wanted to allow the business
to run on its own so that he can focus on establishing other things. Great as
that may sound, I told him it was too early, and the move was wrong. As usual,
he told me “I know what I am doing”

Recently, he told me he
was not breaking even and cost was driving him out of business. He then said,
“I am not losing customers, but I can’t explain why I am not making profit.” He couldn’t explain ‘why?’

The early
stage of your business is not a time for exploring other business activities,
it’s a time to consolidate on what you have, identify the direction and learn
more about your current business. Like my friend, you may not be losing
customers, cost is going up, and you are not gaining new customers because you
are yet to learn the uniqueness of your business. You are yet to identify means
to efficiently and effectively satisfy both new and old customers.

The early years of your
business is a time for

·Building a system

There is no
better time to put a structure in place than the early days of business. You
have to build a structure that will distinguish you in the market and set you
on the path of growth.

·Strengthening strategy

As you grow
daily in business, so does your strategy grow older. Handling the activities in
your business helps you reinforce your strategies, and better define your
business vision.

·Knowing your customers better

If you are
not losing customers, and it cost you more to service the same customers, then
there is something about your customers/client that you are missing.

The airways of business
are too rocky for you to put your business on auto pilot as a young start-up. The
early days of your business are too important to be left under the care of
someone else. It should be a time of learning and experimenting, testing
strategies and bringing in of creative and innovative ideas into your
operation. This
cannot be achieved without continuous and systematic innovative activities by
business owners.

Thursday, 15 October 2015

Innovation in business
is very important, but most important is developing a product/service consumers
are willing to buy. Over the years, many products with innovative features have
failed, not because they are not good, in fact, most times, they bring more to
the market than existing products. Unfortunately, consumers end up avoiding
them leading to over 70-90% of innovation failures and eventual withdrawal of
such product from the market. Examples like Microsoft Windows Vista, Apple’s
Newton PDA, the Concorde supersonic airplane etc reminds us that not everything
innovative finds a market. Some of them actually came into the market when
consumers were not ready for such innovation.

Entrepreneurs with new
products or services want customers to adopt it and get maximum satisfaction
from using them. However, entrepreneurs often face the challenge of convincing
customers to move from an existing product where they derive satisfaction, to a
new one which its utility is not certain.

Here are some reasons customers may resist your new offerings.

1.Your products bring too much change

Change
is good, but customers don’t always appreciate it when a product is bringing
too much change to their lifestyle. For instance, Coca Cola’s attempt to change
the original taste of coke was met with resistance. When consumers feel very
comfortable with an existing product, they can go to any length to resist any
attempt to change it especially when such a change will affect other areas of
their lives. This resistance comes as a result of consumers being satisfied
with their current situation, and see no reason to change. Habits that have
been developed while using a particular product are difficult to do away with.
Any product that requires a change in behaviour will likely experience
resistance.

2.Innovations with the wrong
technology

Many
businesses apply the wrong technology in their market. In Nigeria, when it
comes to telecoms, GSM is the way to go. Over 90% of subscribers use it, and it
is the preferred network in the world. For companies that came into Nigeria
with CDMA technology - Starcomms, Multi-links etc, it wasn’t a favourable
market for them. Technology has seasons and regions where they are most
appreciated. E-retailers in Nigeria observed that insisting on shoppers buying
and paying online alone may not give them the desired result; they decided to
introduce ‘Pay-on-delivery.’ This act is building confidence in people to use
the technology. The right technology must be one that fits into a people’s
lifestyle, values and norms. Every technology introduced into a business must
be compatible with the desires of the consumers.

3.Innovations that are too complex

Keep
it simple. Innovation is all about simplifying life. Innovative products are
those that are useful to consumers, and are easy to use. Years back, the long
process of registering on a website puts off many people, but today, with your
social media accounts, it looks seamless. Consumers are always reluctant to go
for innovative products that are complex to use, complicated and confusing. If
you can’t keep it simple, it’s not good enough.

Consumers’ resistance
of a product doesn’t mean a failure, but it points out the need for
entrepreneurs to pay more attention to the needs of the market. Bringing a
technology that consumers are not familiar with, and the risk level cannot
easily be ascertained will create an air of doubt in the consumers. If the resistance
is allowed to prolong, it leads to rejection and eventual product failure.

Tuesday, 13 October 2015

Ayomide Oke is a software
developer I met in 2013 on my way to Kano state. While we were waiting for the
flight to take off, I watched him play around with an application on his device;
it was fascinating especially when I discovered it was a financial package. We
got talking, and he explained that he was on his way to Abuja to make some
presentations to some financial institutions about this package. The package
was modelled after M-Pesa, Kenya’s successful e-payment system. He displayed
all the features and functions of the application, and how Nigeria’s economy
will be better off with the package. I was confident any financial institution
will jump at it since Nigeria was talking about a cashless society.

Unfortunately, Ayomide’s
story was different. He explained how
difficult it has been for him to sell the product to clients, even though it
was a great product. I was thinking aloud why would any client not want such software
that will empower the unbanked in rural areas in Nigeria and make the
organisation profitable in the long run? So with my background in Marketing, I
started probing further into why such a good product got rejected by clients. One of the questions I asked him was, “After
your presentations, what responses do you normally get?” I was expecting to
hear all the negatives that can make a product fail, but he said, “I usually
get good commendations about the software, but they still can’t commit to
buying the package.” If a package is good, and meets the need of the client,
why is it being resisted?

Many entrepreneurs like
Ayomide have experienced customers’ resistance towards their innovative ideas
or products. It’s frustrating because you know your product is good, even the
customers can attest to it, yet the product struggles to find a place in the
market. This time, the quality of the product or service is not in question, it
can compete with existing offerings in the market, but patronage is still not
as expected. This time, the problem has gone beyond bad product or poor
marketing, other factors have come to play. Even the big corporations
experience this too, for instance, as good as the benefits of the electric car are
or the proposed self driving car, I have seen people developing cold feet
towards these innovations. “They are good, and I like them but they are not my
type of cars” are some of the comments I’ve heard. If all that consumers crave
for is quality product that will bring high satisfaction, why are they
reluctant to adopt same innovations that made it possible?

Understanding why
consumers resist innovative products can help entrepreneurs in handling objection
as well as making an effective presentation. Unfortunately, most businesses
focus mainly on how to get consumers to adopt their products without paying
much attention to some reasons why they may resist such products. This is has
been the cause of failure for many leading innovative products.

Some of these reasons
and how they can be dealt with will be discussed next.